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Despite Cloudy Future, Health Benefits Remain Vital

40 percent of workers would forgo a wage increase to keep their current health coverage

#Joseph Coombs

By Joseph CoombsApr 6, 2015

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Five years after it became law, the Affordable Care Act (ACA) continues to generate debate. One aspect of the law is currently under review by the U.S. Supreme Court, and many organizations are still weighing the act’s potential impact on health care expenses for their employees.

Most research has shown that employers have no plans to eliminate health coverage in the near term. A
joint survey by the Society for Human Resource Management (SHRM) and the Employee Benefit Research Institute (EBRI) from November 2014, for example, revealed that only 1 percent of organizations would cut coverage in 2015 in response to rising costs. And according to
SHRM’s Health Care Reform 2015 Update released March 24, 2015, 79 percent of organizations said their health benefits have either improved or not changed at all as a result of the ACA.

A 40 percent excise tax on high-cost plans, however, will take effect in 2018 and could give employers enough motivation to change the level of the coverage they offer, at the very least. Some have already done so—33 percent of organizations have taken actions or plan to take actions to avoid the excise tax, according to SHRM’s 2015 update survey.

And in 2014, half of organizations surveyed indicated that they had increased the share of employee costs for health care coverage compared with the previous year, according to SHRM’s January 2015
Strategic Benefits—Health Care survey report.

However, other recent reports—one by SHRM as part of its
Strategic Benefits Series, and another from EBRI—have also highlighted the value in health care plans for both employers and employees, beyond the bottom-line expenses that are often associated with these benefits.

SHRM’s March 2015 Strategic Benefits survey report,
Leveraging Benefits to Retain Employees, found that one-quarter (25 percent) of HR professionals leverage their companies’ benefits programs to retain employees at all levels of their organizations. The most-cited benefit? Health care, which was leveraged by nearly 3 out of 4 organizations (74 percent) as part of retention strategies. From that same group, health care was also the most highly touted benefit for retaining high-performing employees (60 percent) and high-skilled employees (70 percent).

From that same set of Strategic Benefits research, nearly 3 out of 10 HR professionals (29 percent) said their organizations leveraged benefits in order to recruit workers at all levels, as shown in SHRM’s
Leveraging Benefits to Recruit Employees report. Once again, health care was the benefit most frequently cited overall (85 percent), with 77 percent leveraging it specifically to recruit highly skilled employees.

Elsewhere, a February 2015
EBRI report found that most workers (70 percent) “are satisfied with the health benefits they currently receive” and expressed little interest in changing the current mix of benefits and wages offered by their employers.

One data point from EBRI’s research is perhaps even more telling about health care’s relevance for workers—40 percent of those surveyed said they would give up a wage increase to maintain their current health care coverage.

Workers also have come to rely on their employers’ judgment in selecting health care plans, according to EBRI’s research. More than 4 out of 5 (85 percent) expressed some level of confidence that their employer or union has selected “the best available health plan.”

The report’s authors concluded that, despite the uncertainty that the ACA has created about the future of workplace health plans, “the importance of benefits as criteria in choosing a job remains high” and health insurance in particular continues to be, by far, the most important employee benefit to workers.